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A Health Savings Account, a Positive Addition This Open Enrollment Period

With all the talk of health care reform in the media and health care premiums on the rise, employers need effective solutions to lower expenses while being able to continue to offer attractive benefit plans to their employees. One alternative to consider this open enrollment period is adding an HSA compatible (high-deductible) plan to your health care plan offerings.

Effective communication of employee benefits is important in assisting employees in making informed health care decisions. A few things to think of regarding your benefits meetings this open enrollment period are:

Start early Open enrollment season is just around the corner. Employers should start communicating early about health care plan choices, especially when adding an HSA compatible health plan. Place posters in prominent places to let your employees know about the upcoming open enrollment meetings. Consider payroll stuffers and announcements on your company website,for both onsite and webinar sessions.

Allow plenty of time for your meetingsAllow sufficient time to review the summary plan benefit documents, as well as a Q & A session for employees to become familiar with new plans. Ideally, 90 minutes has proven effective. Schedule flexible meeting times, extend the invitation for spouses/partners to participate. Offer refreshments and make the meetings fun.

Transparency Share the total costs of the benefits being provided. Your employees may be surprised when they realize the commitment you make to their careers and the well being of their families, rather than simply what their cost to have benefits is.

Information & Trusted Advisors Arm your employees with as much information as available. If you have a company intranet, consider creating a tab exclusively featuring the benefits and post as much detail about the various plans being offered. Provide links to the carrier’s websites for further exploration. Rely on your brokers, agents and partners as a resource for education, FAQ’s, and additional support.

Why offer an HSA?With over 13.5 million people in the US enrolled in an HSA, it continues to be an increasingly popular option. HSA compatible plans offer lower premiums coupled with a taxed advantaged, interest bearing savings account. Funds from an HSA are used to pay for qualified medical expenses (tax free) until the deductible is met and unused funds rollover year after year. The account earns interest (tax free) and provides for long term benefits for future qualified medical expenses. At the age of 65, you may also use your HSA funds to pay for Medicare premiums or use the money for non-qualified distributions without incurring a 20% penalty.* If today you are in a 28% tax bracket, with an HSA, for every $10.00 of medical expenses you incur..... you are really only paying $7.20.

Is an HSA better than an FSA? Absolutely! While an FSA allows employees to set aside tax free dollars to pay for current year medical expenses, they need to predict what those expense will be. Additionally, in 2014 the maximum contribution will be capped at $2500. The FSA is not an interest bearing account, does not rollover from year to year, and is not portable through employment or insurance changes.

Having an HSA compatible health plan option available, in addition to a traditional (co-pay) plan option, gives employees an opportunity to save money! Plus, when an employer makes contributions to an HSA, the adoption rates are greater, saving even more in premiums, and the full contribution goes into the HSA account. The employer does not pay FICA taxes and the employee receives the contribution tax free.

At Canandaigua National Bank & Trust, we have partnered with a leading national provider, HSA Bank, to bring Health Savings Accounts to our consumers and businesses. By drawing upon HSA Bank’s servicing expertise and the convenient option to make deposits and withdrawals at our CNB Bank Offices, we offer a valuable solution to our customers.

HSA Bank is a national leader in HSA administration and recognized in the industry for providing superior customer service. Our partnership allows us to leverage the expertise of HSA Bank and continue to provide you with the exceptional customer experience that you have come to expect from CNB.

If you are interested in knowing more about HSAs, please don’t hesitate to contact us at (585) 394-4260.